Food store sales volumes fell by 0.3% in December 2022 from a rise of 1.0% in November, suggesting that customers stocked up early for Christmas.
According to recent data from the Office of National Statistics (ONS), retail sales values, unadjusted for price changes, fell by 1.2% in December 2022, following a rise of 0.5% in November 2022.
Between 2021 and 2022, the ONS found overall retail sales volumes fell by 3.0%, as the lifting of restrictions on hospitality led to a return to eating out – just as rising prices and the cost of living affected started to have a bigger impact on consumers.
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While sales values (amount spent) continue to increase, supermarkets have reported that they are seeing a decline in volumes sold (quantity bought) because of the increased cost of living and food prices.
The data also revealed that food sales volumes have followed a downward trend since the lifting of restrictions on hospitality in summer 2021.
Non-food stores sales volumes fell by 2.1% over the month, with continued feedback from retailers and other wider evidence that consumers are cutting back on spending because of increased prices and affordability concerns.
However, compared with the pre-coronavirus (COVID-19) level in February 2020, total retail sales were 13.6% higher in value terms in December 2022, but volumes were 1.7% lower.
Compared with the same period a year earlier, retail sales volumes fell by 5.7% in the three months to December 2022, while sales values rose by 4.5%.
“As we move further into Q1 2023, we expect a further slowdown across the retail landscape as consumers continue to grapple with rising prices, especially food items, and high energy costs,” partner at global consultancy Simon-Kucher & Partners, Rosalind Hunter said.
“On the upside, we are seeing inflation slowly come down—to 10.5% in December after spiking to over 11% last autumn—along with a drop in wholesale energy prices, although it will take some time before these changes are felt by consumers.”
Hunter added that most retailers will be bracing themselves for a difficult year and to expect a number of closures announced as the year progresses.
“Though much of the focus is on inflation and consumer demand, the retail market will continue to face pressures on the cost and operational side.”
In response to the ONS reporting that retail sales fell by 1% in December, managing director and head of retail at Europe at Alvarez & Marsal, Erin Brookes commented:
“Inflation hit consumers and retailers hard this Christmas, with fewer goods costing more. Food retailers performed well over the festive period, after significant investment in low prices and marketing, as well as benefiting from the strike impact on hospitality,” she said.
The news comes as the chair of the government’s net-zero review has been hit with backlash after publishing the latest environmental recommendations, with policy and trade experts saying it could have a “significant impact on trade” in the UK.
